Taiwan Semiconductor's Expansion in AI and 2nm Technology Set to Boost Future Growth, Analyst Says

Taiwan Semiconductor Manufacturing Co TSM will hold a press conference on July 18.

As demand for generative AI continues to expand, UBS gave TSMC a “Buy” rating with a target price of 1,070 yuan.

The “four questions” from UBS include the outlook for the semiconductor cycle, gross profit margin trends, capital expenditure updates and order visibility for 2025, and the potential advancement of 2nm processes, UDN reports.

UBS noted the semiconductor cycle will benefit from solid cloud AI and high-performance computing (HPC) applications.

They expect TSMC’s gross profit margin to rise due to expanding AI demand and advanced process technology. UBS estimates EPS from 2024 to 2028 to be 40.14 yuan, 53.27 yuan, 60.75 yuan, 69.5 yuan, and 80.23 yuan, respectively.

UBS analyst Lin Lijun highlighted TSMC’s 2025 outlook, noting increased revenue forecasts and improved demand for 2nm technology. UBS revised TSMC’s capital expenditure from $35 billion to $37 billion, with capital intensity reaching 34%.

Lin Lijun is optimistic about TSMC maintaining its position as the primary CoWoS supplier in 2025, with a market share of over 80%. TSMC’s wafer production capacity will likely reach 40,000 per month by 2024 and 55,000 by the end of 2025, courtesy of Nvidia Corp NVDA and other cloud computing applications.

Demand for TSMC’s 3nm process remains strong, driven by new products from major SoC players, Intel Corp’s INTC outsourcing orders, and Apple Inc’s AAPL iPhone replacement cycle.

Price Action: TSM shares traded higher by 3.75% at $182.29 at the last check Wednesday.

Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.

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